DAX index forecast for June 2022

Germany’s DAX index weakened on Friday as data showed a loss of momentum in private business conditions in the eurozone.

The S&P Global Eurozone PMI Composite Output Index fell to a four-month low of 54.8 in May, and according to S&P Global Market Intelligence Chief Business Economist Chris Williamson, risks appear to be skewed to the downside for the coming months.

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Manufacturing orders fell for the first time in almost two years in May, largely due to inflation concerns, and JP Morgan CEO Jamie Dimon warned about an economic “hurricane” on the horizon.

The services index for the eurozone also edged down to 56.1 from 57.7 in April, and it is important to say that the services PMI in Italy, Spain, Germany, and France fell as well. S&P Global Market Intelligence Chief Business Economist Chris Williamson said:

The near-term fate of the eurozone economy will therefore depend on the extent to which a fading tailwind of pent-up demand can offset the headwinds of geopolitical uncertainty amid the Ukraine war, supply chain disruptions and the rising cost of living, the latter likely exacerbated by tightening monetary conditions.

Another negative information is that inflation in the EU soared to a record high of 8.1% YoY in May, and as for the whole of Europe, rising inflation is a threat to the German economy.

Deutsche Bank raised expectations over European Central Bank policy tightening and expects a 50 basis point rate increase in September. The European Central Bank will meet next week, and investors will continue to pay attention to the ECB commentaries looking for any clues.

The Ukraine war and the subsequent sanctions are fueling price pressures, and since the beginning of the war, raw materials and commodities prices can not stabilize.

Supply chain disruptions continue to be one of the major problems for many companies, and it is important to say that the EU approved an embargo on crude oil imports from Russia.

The German economy is particularly vulnerable to shortages of key parts, commodities, and raw materials, and manufacturing growth in the country slowed as factories faced supply shortages, high prices, and a fall in demand.

14,000 represents a support level

DAX index weakened on Friday, but it continues to trade above the 14,000 support level.

Further turmoils should not be discounted, and if the price falls below 14,000 points, the next target could be at 13,500 points.

Summary

Germany’s DAX index weakened on Friday as data showed a loss of momentum in private business conditions in the eurozone. Further turmoils should not be discounted, and if the price falls below 14,000 points, the next target could be at 13,500 points.

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